BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 2X1
Author: Hernandez (D)
Amended: 4/1/13
Vote: 21
SENATE HEALTH COMMITTEE : 7-2, 2/20/13
AYES: Hernandez, DeSaulnier, Monning, Beall, Pavley, Wolk,
Rubio
NOES: Anderson, Nielsen
SENATE APPROPRIATIONS COMMITTEE : 5-2, 2/21/13
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
SENATE FLOOR : 26-10, 2/28/13
AYES: Beall, Block, Calderon, Corbett, Correa, De Le�n,
DeSaulnier, Evans, Galgiani, Hancock, Hernandez, Hill,
Jackson, Lara, Leno, Lieu, Liu, Monning, Padilla, Pavley,
Price, Roth, Steinberg, Wolk, Wright, Yee
NOES: Anderson, Berryhill, Emmerson, Fuller, Gaines, Huff,
Knight, Nielsen, Walters, Wyland
NO VOTE RECORDED: Cannella, Vacancy, Vacancy, Vacancy
ASSEMBLY FLOOR : 51-25, 4/25/13 - See last page for vote
SUBJECT : Health care coverage
SOURCE : Author
DIGEST : This bill applies the individual insurance market
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reforms of the Affordable Care Act (ACA) to health care service
plans (health plans) regulated by the Department of Managed
Health Care (DMHC) and updates the small group market laws for
health plans to be consistent with final federal regulations.
Assembly amendments (1) expand provisions tying provisions of
California law to federal law, (2) prohibit a carrier or agent
or broker (in both the individual and small group markets) from
discriminating, as specified, (3) revise single risk pool
provisions, as specified, (4) prohibit student health insurance
coverage, as defined in federal regulations, to be included in a
health insurer's single risk pool for individual coverage, (5)
revise the geographic rating regions (in both the individual and
small group markets) to include the same 19 regions as in AB
1089 (Monning, Chapter 852, Statutes of 2012), (6) delete
provisions related to the Health Insurance Portability and
Accountability Act of 1996, (7) delete Children's Health
Insurance Program Continuation Coverage, and (8) include other
technical and conforming changes to make this bill consistent
with AB 2X1 (Pan).
ANALYSIS :
Existing federal law:
1.Establishes the ACA, which imposes various requirements on
states, issuers, employers, and individuals regarding health
care coverage.
2.Requires each health insurance issuer that offers coverage in
the individual or group market to accept every employer and
individual that applies for that coverage and to renew that
coverage at the option of the employer or the individual.
This is known as guarantee issue and guarantee renewability.
3.Prohibits a group health plan and a health insurance issuer
offering group or individual health insurance coverage from
imposing any preexisting condition exclusion with respect to
that plan or coverage.
4.Allows the premium rate charged by a health insurance issuer
offering small group or individual coverage to vary only as
specified, and prohibits discrimination against individuals
based on health status.
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5.Defines "grandfathered plan" as any group or individual health
insurance product that was in effect on March 23, 2010.
Existing state law:
1.Provides for regulation of health insurers by the California
Department of Insurance (CDI) under the Insurance Code and
provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) pursuant to the Knox-Keene
Health Care Service Plan Act of 1975 (Knox-Keene Act),
collectively referred to as carriers.
2.Establishes the California Health Benefits Exchange, known
today as Covered California, to facilitate the purchase of
qualified health plans through the Exchange by qualified
individuals and qualified small employers by January 1, 2014.
3.Requires, as a condition of participation in the Exchange,
carriers that sell any products outside the Exchange to fairly
and affirmatively offer, market, and sell all products made
available in the Exchange to individuals and small employers
purchasing coverage outside of the Exchange.
4.Requires health plans to fairly and affirmatively offer,
market, and sell health coverage to small employers, known as
"guaranteed issue."
5.Defines a "preexisting condition provision" as a contract
provision that excludes coverage for charges or expenses
incurred during a specified period following the employee's
effective date of coverage, as a condition for which medical
advice, diagnosis, care, or treatment was recommended or
received during a specified period immediately preceding the
effective date of coverage.
This bill:
1.Prohibits, in existing small group law, a plan or solicitor
from directly or indirectly employing marketing practices or
benefit designs that will have the effect of discouraging the
enrollment of individuals with significant health care needs,
or discriminate based on an individual's race, color, national
origin, present or predicted disability, age, sex, gender
identity, sexual orientation, expected length of life, degree
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of medical dependency, quality of life, or other health
conditions.
2.Prohibits a health plan from requiring an individual applicant
or his/her dependent to fill out a health assessment or
medical questionnaire prior to enrollment.
3.Requires on or after October 1, 2013, a health plan or insurer
to fairly and affirmatively offer, market, and sell all of the
plan's health benefit plans that are sold in the individual
market for policy years on or after January 1, 2014, to all
individuals and dependents in each service area in which the
plan provides or arranges for health care services.
4.Prohibits in the individual market a health plan from imposing
any preexisting condition provision upon any individual.
5.Prohibits in the individual market a health plan from
establishing rules for eligibility.
6.Establishes in the individual market as an initial open
enrollment period, from October 1, 2013 to March 31, 2014, and
annually after that from October 15 to December 7.
7.Permits in the individual market only using specified
characteristics of an individual, and any dependent thereof,
for purposes of establishing the rate of the health benefit
plan.
8.Requires a health plan outside Covered California to inform an
applicant for coverage that he/she may be eligible for
lower-cost coverage through Covered California and the Covered
California enrollment period. (Does not apply to
grandfathered plans.)
9.Requires a health plan outside Covered California to issue a
notice to a subscriber that he/she may be eligible for
lower-cost coverage through Covered California and shall
inform the subscriber of the applicable open enrollment period
provided through Covered California. (Does not apply to
grandfathered plans.)
10.Requires a grandfathered health benefit plan to issue a
notice, as specified, annually and in any renewal material.
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11.Makes inoperative 12 months after the repeal of federal
guarantee issue and/or the federal individual mandate and
federal community rating provisions, the following California
small group provisions:
A. Guarantee issue;
B. Community rating; and
C. Prohibition on eligibility rules based on health status
and other factors.
1.Makes operative prior California small group law related to
guarantee issue and rating requirements if federal guarantee
issue and federal community rating are repealed.
2.Makes operative 12 months after the repeal of the federal
individual mandate the following California individual market
provisions:
A. Written policies on underwriting;
B. Rescission requirements; and
C. Guarantee issue for children.
1.Makes this bill's provisions contingent upon the enactment of
AB 2X1 (Pan).
Background
On January 24, 2013, Governor Brown issued a proclamation to
convene the Legislature in Extraordinary Session to consider and
act upon legislation necessary to implement the ACA in the areas
of: (1) California's private health insurance market, rules and
regulations, governing the individual and small group market;
(2) California's Medi-Cal program and changes necessary to
implement federal law; and (3) options that allow low-cost
health coverage through Covered California to be provided to
individuals who have income up to 200% of the federal poverty
level. This bill along with AB 2X1 addresses the first of three
areas identified in the Governor's proclamation.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee, special fund
costs to DMHC Managed Health Care Fund to adopt/modify
regulations, review plan filings and respond to consumers. For
fiscal year 2013-14, costs are estimated at $370,000.
SUPPORT : (Verified 4/25/13)
100% Campaign
AARP
AFSCME, AFL-CIO
American Cancer Society Cancer Action Network
American Heart Association
California Academy of Family Physicians
California Alliance for Retired Americans
California Optometric Association
California Primary Care Association
California Public Interest Research Group
Children Now
Children's Defense Fund-California
Children's Partnership
Congress of California Seniors
Consumers Union
Greenlining Institute
Health Access
Latino Coalition for a Healthy California
National Association of Social Workers - California Chapter
National Multiple Sclerosis Society
PICO California
Transgender Law Center
United Nurses Associations of California/Union of Health Care
Professionals
OPPOSITION : (Verified 4/25/13)
Association of California Life & Health Insurance Companies
California Association of Health Plans
California Department of Insurance
ARGUMENTS IN SUPPORT : The Brown Administration has requested
a broader tie-back to the ACA that would also make inoperative
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state provisions prohibiting preexisting condition exclusions
and prohibiting eligibility rules based on health status
factors. This bill has been amended to include broader tie-back
provisions.
This bill is supported by the AARP, California Alliance for
Retired Americans, Health Access California, Consumers Union,
the Latino Coalition for a Healthy California, and the 100%
Campaign. Proponents support this bill because it addresses
pre-existing condition exclusions, premium rating based on
health status, intrusive health questionnaires, provides
protections against mid-year rate increases, no tobacco rating,
and limits on age rating. Health Access indicates the ACA is
here to stay, but if for some reason in the future, aspects are
repealed, the Legislature and the Governor should take the time
to develop a policy response that protects consumers. Health
Access accepts 19 rating regions in this bill as established in
AB 1083. Health Access reluctantly accepts limits on guarantee
issue given federal rules. AARP supports this bill because it
will especially help 50 to 64 year olds who are working for
employers that do not provide health care coverage. These
individuals are usually priced out due to preexisting
conditions.
Consumers Union supports this bill's 19 rating regions and the
provision to revisit geographic rating regions in future years.
Consumers Union supports provisions limiting rating factors,
uniform disclosure of benefits and costs, notice of affordable
care options and the effort to implement a single risk pool to
ensure that each issuer's total individual market book of
business is included in one risk pool and total small group book
of business is in a single risk pool. Consumers Union also
supports the 12 month tie-back provision which gives the
Legislature and the Governor time to respond to federal changes.
The 100% Campaign believes the notices that consumers receive
about their family's health insurance options are crucial to
consumers making informed coverage choices within the new health
care landscape.
ARGUMENTS IN OPPOSITION : The California Department of
Insurance (CDI) opposes this bill unless it is amended to
incorporate geographic rating regions established by CDI.
According to CDI, the design of the geographic rating regions
will play an important role in determining what level of premium
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disruption consumers' experience. CDI believes the 19 rating
region proposals will result in a maximum increase of 25% for
consumers, and that the most significant increases would be felt
in Greater Sacramento, Northern Central Valley, and West Los
Angeles. With the CDI proposal, according to CDI, Northern
California and parts of the Central Valley would see the most
significant premium increases. The CDI indicates that
policyholders will also see an increase in premiums once the age
bands, and age factors are determined, and some will see an
increase because of the essential health benefits requirement.
ASSEMBLY FLOOR : 51-25, 4/25/13
AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Eggman, Fong,
Fox, Frazier, Garcia, Gatto, Gomez, Gordon, Gray, Hall, Roger
Hern�ndez, Holden, Jones-Sawyer, Levine, Medina, Mitchell,
Mullin, Muratsuchi, Pan, Perea, V. Manuel P�rez, Quirk,
Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Torres,
Weber, Wieckowski, Williams, John A. P�rez
NOES: Achadjian, Allen, Bigelow, Ch�vez, Conway, Dahle,
Donnelly, Beth Gaines, Gorell, Grove, Hagman, Harkey, Jones,
Linder, Logue, Maienschein, Mansoor, Melendez, Morrell,
Nestande, Olsen, Patterson, Wagner, Waldron, Wilk
NO VOTE RECORDED: Lowenthal, Nazarian, Yamada, Vacancy
JL:ej 4/26/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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